1887

OECD Working Papers on Fiscal Federalism

This series covers issues related to intergovernmental fiscal relations and local/regional public finance, such as: tax and spending assignment across government levels; intergovernmental grants; fiscal equalization; local and regional public service efficiency; inter-jurisdictional tax competition; and macroeconomic issues such as intergovernmental fiscal management and sub-central fiscal rules. Many of these working papers are outputs of the OECD Network on Fiscal Relations Across Levels of Government. Related working papers on fiscal federalism issues are also published in other OECD working paper series on tax policy, economics, public governance and regional development. An integrated list of key papers produced by the Fiscal Network can be found at http://oe.cd/fiscalnetwork.

(Note: numbers 1, 6 and 8 are available in the OECD Economics Department Working Papers, as numbers 465, 626 and 705.)

English

The spending power of sub-central governments

A pilot study

This pilot study presents indicators that assess sub-central government (SCG) spending power by policy area. Traditional indicators – such as the share of SCG in total government spending – are often misleading as they underestimate the impact of central government regulation on sub-central spending patterns. In order to gauge true spending power, a set of institutional indicators is established, based on a detailed assessment of institutional, regulatory and administrative control central government exerts over various SCG policy areas. Results tend to confirm the limited discretion of SCGs over their own budget. Education in particular – the main SCG budget item in most countries – is strongly shaped by central government regulation. Federal countries tend to grant more spending power to SCGs than unitary countries.

English

Keywords: Sub-central government, fiscal rules, fiscal discipline, indicators
JEL: H74: Public Economics / State and Local Government; Intergovernmental Relations / State and Local Borrowing; H81: Public Economics / Miscellaneous Issues / Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts; H71: Public Economics / State and Local Government; Intergovernmental Relations / State and Local Taxation, Subsidies, and Revenue; C43: Mathematical and Quantitative Methods / Econometric and Statistical Methods: Special Topics / Index Numbers and Aggregation; leading indicators; H72: Public Economics / State and Local Government; Intergovernmental Relations / State and Local Budget and Expenditures; D78: Microeconomics / Analysis of Collective Decision-Making / Positive Analysis of Policy Formulation and Implementation
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